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Dynamic Trading and the Voluntary Disclosure of Information

7 November 2018 at 12:00 PM - 1:30 PM

Room 207, Campus on Viale Romania 32

Speaker: Luca Gelsomini, HES Univesrity of Moscow

Title: Dynamic Trading and the Voluntary Disclosure of Information.

Abstract: This paper is the first to propose a comprehensive theory of the public disclosure of trades by an insider whose orders have no direct price impact. A reputational model shows that not all insiders manipulate prices with uninformed disclosures. More importantly, it shows that an insider earns at least as much with a disclosure rule as without one, implying that mandatory disclosure is unnecessary because trades are revealed voluntarily. A generalization of the theory analyzes first the disclosure of ex-ante unverifiable inside statements without requiring the insider trader to disclose ‘honestly’; to date, this has been a limiting assumption in the literature. Numerous policy implications are drawn.